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Corning (GLW) will buy the Communication Markets Division of 3M (MMM) for $900 million. The 3M division has approximately $400 million in annual sales of high bandwidth and optical fiber products. Corning expects the acquisition to add 7 cents to 9 cents to its fiscal 2019 earnings per share.
The deal follows on a Corning strategy of acquiring optical fiber businesses that let the company increase its share of the high-growth data center market at a time when cloud computing is driving demand for fiber optic fiber and equipment. In 2016, for example, Corning acquired Alliance Fiber Optic Products. Standard & Poor’s sees fiber demand running ahead of supply in 2017 as companies such as Verizon (VZ) ramp up purchases of optical equipment. (Verizon has announced that it will buy at least $1.05 billion in optical solutions over the next three years.)
Corning’s Optical Communications segment accounted for 32% of sales in fiscal 2016.
Corning is a member of my long-term 50 Stocks Portfolio. The shares are up 261% since I added them to this portfolio on December 30, 2008.